OMB Circular A-123, Appendix D Becomes Effective October 1, 2013

On September 20th, the interim final version of OMB Circular A-123, Appendix D, Compliance with the Federal Financial Management Improvement Act of 1996 (M-12-23) was released.  Appendix D, effective October 1, 2013, provides additional guidance and defines new requirements for Financial Management Systems determining compliance with the FFMIA.  Appendix D rescinds all previously issued versions of Circular A-127, Financial Management Systems.

Please see http://www.whitehouse.gov/sites/default/files/omb/memoranda/2013/m-13-23.pdf for OMB Circular A-123, Appendix D.

Financial system shared services still lacks governance model

Establishing a governance model for the latest Office of Management and Budget attempt to move federal financial managed systems onto a shared systems model remains an unfinished priority, officials said during a Sept. 25 panel.

OMB released in March a memo (.pdf) requiring agencies to use "with limited exceptions" a shared services solution when modernizing core accounting or mixed financial systems, with preference given to federal agencies designated as a shared service provider. The idea is that shared infrastructure for processes that can be standardized within and across agencies will reduce spending on financial systems, which currently consumes about $8.4 billion annually, said Elizabeth Angerman, director of the Office of Financial Innovation and Transformation within the Treasury Department. She spoke at an AFCEA-Bethesda morning event in Rockville, Md.

The concept is similar to the George W. Bush-era OMB's financial management line of business initiative, which also faced difficult governance questions that were never fully resolved; the FMLoB effort fell further behind when in its first term, the Obama administration de-emphasized Bush-era OMB policies.

"We don't have the governance structure set up, and that is a concern for our politicals--that they don't have a say, that it'll be some other secretary, and that secretary is five, six levels removed," said Myrian Myer, Labor Department associate deputy chief financial officer.

If the expectation is that agencies are (again) going to contract with each other for financial system services, "what are the rules, who gets a say, how is that going to work?" Myer said. "All those things need to be figured out, and they can be--but they haven't yet."

-David Perera, FierceGovernmentIT.com

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OMB gives agencies more control over financial management systems

Agencies are gaining more control over how to upgrade their financial management systems.

Instead of a strict set of rules around the technology requirements for federal systems, the Office of Management and Budget will rescind Circular A-127 that governs financial systems, and, through this memo, move and simplify those regulations into Appendix D of Circular A-123.

OMB Director Sylvia Burwell wrote in a memo to agency leaders that said, "The goal of this Appendix is to transform our compliance framework so that it will contribute to efforts to reduce the cost, risk, and complexity of financial system modernizations. The objective of this approach will be to provide additional flexibility for federal agencies to initiate smaller-scale financial modernizations as long as relevant financial management outcomes (e.g., clean audits, proper controls, timely reporting) are maintained."

In a nutshell, implementing the Federal Financial Management Improvement Act (FFMIA) has become arduous and ended up forcing agencies into costly financial management upgrades.

So now Appendix D is more streamlined. OMB reduced the number of requirements from more than 500 to about 60 that focus on outcome or output.

OMB began to dismantle FFMIA regulations over the last several years. The administration closed down the Federal Systems Integration Office (FSIO) in March 2011 and moved a lot of the oversight and standards work to the Treasury Department's Office of Financial Innovation and Transformation (OFIT).

-Jason Miller, FederalNewsRadio.com
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CFTC Seeks Chief Financial Officer

Apply now for an exciting opportunity as the Chief Financial Officer at the Commodity Futures Trading Commission (CFTC). With an expanded mission and authority to include oversight of the swap markets, the CFTC continues to protect the American public by promoting market integrity, transparency and preventing and prosecuting fraud, manipulation and other abuse in the futures and options markets. Please visit www.cftc.gov to learn more about the CFTC.

This position is located in the Financial Management Branch of the Office of the Executive Director.  As the Director, Office of Financial Management Branch, you will serve as the Chief Financial Officer (CFO), or principal technical advisor to the Executive Director and the Chairman on the financial management programs of the Commission and is a member of the Commission's senior management team.

Director, Financial Management, CT-505-16

Open: 08/29/13    Closes:  09/20/13

https://www.usajobs.gov/GetJob/ViewDetails/350664100?share=email.

OMB following a familiar path as it shapes new financial internal controls

The Office of Federal Financial Management is taking a page out of the cybersecurity reform book in how it's changing how agencies oversee spending.

OFFM is updating its Circular A-123 guidance to be more like the future vision of cybersecurity — based on risk and data, and done more than every three years.

Mike Wetklow, the chief of the accountability performance branch at OFFM in the Office of Management and Budget, said there are several guiding principles going into the revision, including integrating an internal controls framework, reducing the compliance burdens and innovation through data analysis.

"Many of these principles we are putting in practice, we're going to have examples of charge cards, improper payments and data analytics," said Wetklow during a panel discussion at the Association of Government Accountant's Internal Control and Fraud Prevention Training event Tuesday in Washington. "We have a lot of things we are trying to do differently like, for example, with Hurricane Sandy last year. There was a memo earlier in the year about internal control plans. A lot of our discussions were we didn't want to make this a new Recovery Act or have this big compliance exercise right in the middle of disaster response, but to really use the internal controls as a risk management tool. We didn't ask agencies to document their control environment, the risk assessment, the control activities, the full gauntlet of all those things. We asked them to simply do a thoughtful analysis of their risks that came about from the extra funding that went into their programs, and just work with OMB on that."

Federal financial management and cybersecurity policy face similar challenges. Both need to keep up with the changing environment and expectations, and move from a static to a dynamic approach.

Like FISMA, A-123 turned into a static process.

A-123 is a 30-plus-year-old policy from OMB regarding how agencies, and specifically CFOs and their budget staffs, handle the oversight of money, otherwise known as internal controls. Internal controls ensure agencies meet policy and legislative requirements for financial reporting and the effectiveness and efficiency of programs.

OMB last revised A-123 in 2004 after Congress passed the Sarbanes-Oxley bill.

Experts say this latest set of changes is part of the pendulum that seems to swing every decade or so between more or less reporting requirements.

He said one of the biggest changes is what is being added to A-123 to meet the intent and spirit of Congress when it wrote the Federal Financial Management and Improvement Act (FFMIA).

"In the near term, and this will be literally in a couple of weeks, we plan to rescind OMB Circular A-127 and replace it with a new Appendix D to A-123," Wetklow said. "And if you ask yourself, why A-123? When you read the committee report [to FFMIA], it talks a little about financial systems. It talks more about internal controls, business processes, and visibility into government operations. Our hope in what we are doing is we are going to reduce compliance burdens by getting rid of all of these complicated checklists that only serve to drive system's costs and risks, and integrate our processes with the already existing things in A-123."

A-127 addresses financial management system requirements. OMB slowly has been moving away from strict financial management system requirements, and focusing more on standards and outcomes over the last decade.

He said A-123 also will need to be integrated with several other initiatives including new credit card abuse guidance OMB issued last week, improper payment laws that includes the Do Not Pay list and other changes to financial oversight that have come over the past 10 years.

-Jason Miller, FederalNewsRadio.com
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Bill puts contract spending on the hook if Pentagon misses audit deadline

New legislation introduced by Sens. Tom Coburn (R-Okla.) and Joe Manchin (D-W.Va.) aims to push the Pentagon toward being ready for a full financial audit by restricting spending on major weapons programs if DoD fails to get its books in order.

Coburn, who has introduced similar legislation in the past, said a full financial audit will help DoD better prioritize funding.

"This summer the Pentagon canceled important training and furloughed thousands of civilian personnel while it continued to waste billions on non-defense spending that had nothing to do with its core mission," he said in a statement. "A full and complete audit is the only way the department will be able to make better decisions about how it uses valuable taxpayer dollars."

Under the Audit the Pentagon Act of 2013, if DoD fails to obtain a clean audit opinion by 2018, the military services would be barred from spending money to fund new major acquisition programs beyond what's known as "milestone B" — in essence, the actual engineering and manufacturing of new systems.

In addition, the bill would prohibit DoD from purchasing off-the-shelf IT systems if they would take more than three years to install. The bill would require DoD to include terms in its contracts allowing for the termination of IT system contracts that aren't delivered on schedule.

Congress has mandated DoD pass a full financial audit by the end of fiscal 2017. Meanwhile, DoD leadership has set an interim deadline to provide auditable Statement of Budgetary Resources — a full accounting of money flowing in and out of the Pentagon — by the end of 2014.

-Jack Moore, FederalNewsRadio.com
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GAO Seeks Comments on Green Book Exposure Draft

GAO has issued its Green Book Exposure Draft, 
Standards for Internal Control in the Federal Government: 2013 Exposure Draft, 
GAO-13-830SP

Federal Managers' Financial Integrity Act (FMFIA) requires that federal agency executives periodically review and annually report on the agency's internal control systems. FMFIA requires the Comptroller General to prescribe internal controls standards. These internal control standards, first issued in 1983, present the internal control standards for federal agencies for both program and financial management.

Green Book revisions undergo an extensive, deliberative process, including public comments and input from the Green Book Advisory Council. GAO considers all Green Book comments and input from the Green Book Advisory Council in finalizing revisions to the standards.

It is available for public comment until December 2nd.
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Payroll snafu leads to delayed paychecks for many feds

Employees at multiple federal agencies, who would normally receive a direct deposit electronic paycheck today, will have to wait until Tuesday because of a mix-up by the Interior Business Center, one of the largest federal payroll processors.

The official pay date for all agencies serviced by the center's Federal Personnel Payroll System is technically the first Tuesday after the end of the pay period — in this case Sept. 17. Payments, though, are generally provided via direct deposit on the Friday prior to the official pay date, which is today.

However, "an oversight occurred during the certification process" for the current pay period, the center's Payroll Operations Divisions Chief Linda Rihel-Todd said in an email to agencies obtained by Federal News Radio. For affected employees, that means either no electronic payment was deposited into their account or a deposit was made but with a hold on it until Sept. 17.

Some banks could still process payroll deposits today, meaning employees would be paid today, but that's on a bank-by-bank — and even branch-by-branch — basis, according to a senior official at one of the affected agencies.

-Jack Moore, FederalNewsRadio.com
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GSA plans to stop providing HR shared services

The General Services Administration is getting out of the human resources and payroll shared service provider business.

The decision came as part of the review by administrator Dan Tangherlini. He wants GSA to focus on its core missions: acquisition, real estate and some of the technology services, said Anne Rung, GSA's associate administrator in the Office of Governmentwide Policy.

She said HR services just don't fit into their plans anymore.

GSA's HR services provides payroll and other services to 40 agencies and about 30,000 employees, 18,000 of which are its own employees. GSA services mostly small agencies, with the exception of the Office of Personnel Management.

GSA's decision comes as the Obama administration is applying more pressure on agencies to share resources.

The Office of Management and Budget issued a shared services strategy in May 2012, setting a series of deadlines. It followed in March with a memo requiring agencies to consider federal shared service providers first when it's time to upgrade their financial management systems. And OMB created Uncle Sam's List (USL) to have one place to promote the availability of shared services.

OMB is planning to launch version 1.1 of USL in a few weeks that will include a simplified user interface and an easier way to promote existing services, said Peter Warren, who is leading the effort for OMB.

Scott Bernard, OMB's chief architect, said version 2 of Uncle Sam's List is expected to be ready in 2014 and will take into account the findings of a recent survey of acquisition, technology and financial management workers.

With GSA bowing out of HR shared services, including payroll, that leaves only the Interior Business Center (IBC), the Agriculture Department's National Finance Center (NFC) and the Treasury Department's HRConnect as civilian agency providers. But only the IBC and the NFC are payroll providers.

The fifth provider, the Defense Finance and Accounting Service, serves only the Defense Department.

OMB's push for agencies to consolidate commodity IT or seriously consider a government shared services center for financial management are major reasons why there is a growing optimism and demand for shared services.

Another area where there is both a need and a desire for shared services is with geospatial information. Nearly every agency uses geospatial data and more than 30 are part of the Federal Geographic Data Committee (FGDC).

The Homeland Security Department also is looking to expand the cybersecurity line of business. With the recent award for continuous monitoring-as-a-service, Jeff Spicka, the project manager for the Information Systems Security Line of Business, said DHS is looking for more opportunities to set up cyber service providers.

Michael Casella, the chief financial officer at GSA, said agencies need policy help from OMB to solve the funding challenges.

A franchise fund lets providers charge up to four percent more than the cost of the service to pay for technology or other program upgrades. Without a franchise fund, shared service providers under law are prohibited from charging customer agencies anything more than the cost of the service.

Casella said another barrier is the cost of migrating to a shared service provider from legacy systems or switching from one to another.

OMB's deputy controller Norm Dong said the administration understands these funding and franchise fund challenges and encourages agencies to submit a budget proposal to set up a franchise fund.

At the same time, Dong said OMB is looking at policies or guidance for agencies around what recourse they have if the service provider isn't performing well.

-Jason Miller, FederalNewsRadio.com
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Government charge card abuse a firing offense under new OMB guidelines

Federal employees who make illegal or improper purchases with government charge cards could face dismissal under new guidelines from the Office of Management and Budget.

In a memo to the heads of agencies, OMB Director Sylvia Burwell laid out new steps to curb charge-card violations as part of the implementation of the 2012 Government Charge Card Abuse Prevention Act.

The law, approved by Congress and signed by President Barack Obama last fall, ordered agencies to firm up internal safeguards for identifying and stopping unauthorized purchases.

By Sept. 30, agencies need to certify to OMB that they have internal controls in place, according to the memo. Agencies are expected to develop specific penalties for employees who violate charge card policies. Employees who make "illegal, improper or erroneous" purchases with government cards should face disciplinary actions, including dismissal, the memo stated.

Burwell has tasked agency human resources and charge card management officials with developing the proper penalties for violations.

OMB's guidelines also instruct agencies to report government charge card violations at least twice a year. The new reporting requirements go into effect this year for agencies that spend more than $10 million annually on charge cards. The semi-annual reports will have to detail all purchase card violations as well as the disciplinary actions taken. The first report is due Jan. 31.

The 2012 law also instructed agency inspectors general to conduct periodic risk assessments on the use of agency charge cards. Agency IGs are now required to compile an annual status report on charge card audit recommendations.

-Jack Moore, FederalNewsRadio.com
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GAO's Green Book standards near first revision since 1999

The Green Book, the Government Accountability Office's standards for internal control, is nearing its first revision since 1999.

GAO released a draft (.pdf) of the updated standards Sept. 3. The Green Book outlines the concepts and principles of internal control, which GAO defines as the policies and procedures an organization uses to carry out its objectives.

The standards described in the Green Book are about as broad as that definition. In the draft, GAO divides the standards into five sets of principles, one of which instructs management to demonstrate a commitment to integrity and ethics, establish expectations of competence, and enforce accountability.

The general concepts in the draft are not different from the 1999 version (.pdf), GAO says, but the enumerated principles are a new approach that define the standards in greater detail.

In the draft, GAO requests comments from federal officials, accounting professionals, academics and whoever else is interested by Dec. 2. The forthcoming revision to the Green Book will be the third since 1983, when GAO first issued (.pdf) the standards.

- Zach Rausnitz, FierceGovernment.com
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Largest USDA overpayments go toward farm subsidies, report says

The Department of Agriculture doled out more than $20 million in excess financial assistance last year, with the largest overpayments coming in the form of farm subsidies for crop insurance.

In a report released this week, the USDA inspector general said the agency spent nearly $15 million on undue payouts through the Federal Crop Insurance Corporation while issuing no major overpayments for nutrition assistance, including the Supplemental Nutrition Assistance Program — formerly known as food stamps.

Overpayments are defined as payouts that rise at least 50 percent higher than the correct amount while totaling at least $5,000 per individual or $25,000 per organization, according to the analysis.

The watchdog analysis, released Wednesday, focused on the USDA’s compliance with reporting requirements under an executive order President Obama issued in 2009 to reduce high-dollar overpayments.

The Department of Agriculture reported 239 overpayments worth a combined $20.3 million during the 2012 fiscal year, compared to 143 payouts totaling $11.7 million during the previous cycle, according to the review.

Excess payments through the Federal Crop Insurance Corporation averaged excesses of $209,000 per payout. The next highest amount came from a wildland firefighting program that sent out overpayments of $58,000 apiece on average.

The inspector general said the USDA could decrease its overpayments through better control over bookkeeping and stricter adherence to reporting guidelines, including the deadlines for producing quarterly numbers.

The Agriculture Department said in its response that “agencies misinterpreted or deviated from the requirement of the Office of Management and Budget and the [Office of the Chief Financial Officer].” The agency said its CFO would issue a memo directing each department to certify that its reporting processes comply with the established standards.

-Josh Hicks, WashingtonPost.com

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